SF Technotes

Two Takes on the Future of Work

By Michael Castelluccio
December 17, 2020
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The economists, sociologists, and technologists began their assessment of the future of work with how the pie was going to be sliced and shared. The division of labor would be shared among three kinds of workers—people, machines, and algorithms. Then, with the discovery of a growing disparity in the United States over the rewards for increasing productivity, a new group of worried analysts joined the discussion—political scientists, ethicists, and teachers who would address “reskilling” and “upskilling.”

 

And now an international pandemic has put its foot on the scale and realigned the landscape in some ways that are temporary and some that might become permanent. Predicting the future of work has become an even more complicated study. We will look at some of the basic conclusions regarding technology’s role in the future from two year-end reports, one by the World Economic Forum and and the other out of MIT.

 

SHARED HALVES

 

The recently released third edition of the World Economic Forum’s The Future of Jobs Report 2020 (October 20, 2020) spelled out where the world is heading as COVID-19 accelerates the arrival of the future of work.

 

Click on image for the World Economic Forum report for 2020. 

 

The first observation of the study affirmed a continued pace in the adoption of technology in general, with an acceleration in some areas. Adoption of cloud computing, Big Data, and e-commerce will grow, along with a serious increase of attention paid to encryption, robots, and AI.

 

The changes for workers now will include a double disruption due to the adoption of technology and the contractions and lockdowns caused by the pandemic. The report has a number of specific predictions. “Forty-three percent of businesses surveyed indicate that they are set to reduce their workforce due to technology integration, 41% plan to expand their use of contractors for task-specialized work, and 34% plan to expand their workforce due to technology integration.” Along with the personnel changes, the authors point out that “a significant share of companies also expect to make changes to locations, their value chains, and the size of their workforce due to factors beyond technology in the next five years.”

 

As a bottom-line number for the workshare division between people and machines, the World Economic Forum thinks the pie will soon be cut directly in half. “By 2025,” they predict, “the time spent on current tasks at work by humans and machines will be equal.”

 

That symmetrical pie will be created by change, because “By 2025, automation and a new division of labor between humans and machines will disrupt 85 million jobs globally in medium and large businesses across 15 industries and 26 economies.”

 

This shift won’t come as a surprise to most. “More than 80% of business executives are accelerating plans to digitize work processes and deploy new technologies; and 50% of employers are expecting to accelerate the automation of some roles in their companies. In contrast to previous years, job creation is now slowing while job destruction is increasing,” according to the press release about the report.

 

While that proportion sounds ominous, the report also offers a positive change. The authors write, “Based on these figures, we estimate that by 2025, 85 million jobs may be displaced by a shift in the division of labour between humans and machines, while 97 million new roles may emerge that are more adapted to the new division of labour between humans, machines, and algorithms.” Job creation then will continue to run ahead of job destruction, for the present, but if current trends of creation/destruction change, the consequences are unknown.

 

Another problem with the disruption is that high skills gaps persist across the change in jobs. The report says companies “estimate that around 40% of workers will require reskilling of six months or less and 94% of business leaders report that they expect employees to pick up new skills on the job, a sharp uptake from 65% in 2018.”

 

The negative impact of the pandemic combined with technology has been measurable in unprecedented ways in the first phase of economic contraction. The report comments on this. “Comparing the impact of the Global Financial Crisis of 2008 on individuals with lower education levels to the impact of the COVID-19 crisis, the impact today is far more significant and more likely to deepen existing inequalities.” There are means to mitigate the impact, and the report suggests that corporations and nations begin with widespread retraining programs. Saadia Zahidi, one of the report authors, said, “The double disruption of automation and the pandemic has made it painfully clear: we cannot afford to wait any longer for a reskilling revolution.”

 

And finally, the authors of the report believe the future of work has already arrived for a majority of online white-collar workers. Accelerated by the pandemic, “Eighty-four percent of employers are set to rapidly digitalize working processes, including a significant expansion of remote work—with the potential to move 44% of their workforce to operate remotely.”

 

MIT’S “WORK OF THE FUTURE”

 

In the opening pages of the MIT end-of-year report on The Work of the Future, the authors note a general shift from the anxiety expressed in 2018 as we entered a period of significant disruption. Citing historic precedents, they explain, “History and economics show no intrinsic conflict among technological change, full employment, and rising earnings. The dynamic interplay among task automation, innovation, and new work creation, while always disruptive, is a primary wellspring of rising productivity. Innovation improves the quantity, quality, and variety of work that a worker can accomplish in a given time.”

 

Click on image to download a copy of MIT’s The Work of the Future.

 

They also remind us that new technology takes longer to adapt and establish itself than we assume: “As this report documents, the labor market impacts of technologies like AI and robotics are taking years to unfold.” They do add a caution, though, reminding us that we have no time to spare in preparing for these changes. As a chronological guide for expectations, there is an explanation later in the report that major technologies often take four decades from the time of their invention to full and general adoption.

 

The collection of data, analysis, and study by the MIT Task Force on the Work of the Future produced these six general conclusions to end the year:

 

  1. Technological change is simultaneously replacing existing work and creating new work. It is not eliminating work altogether.

“[W]e anticipate that in the next two decades, industrialized countries will have more job openings than workers to fill them, and that robotics and automation will play an increasingly crucial role in closing these gaps.”

 

  1. Momentous impacts of technological change are unfolding gradually.

We won’t be run over by the advances of this Fourth Industrial Revolution. There’s a lag between the creation and full implementation of new technology that allows for the opportunity to “craft policies, develop skills, and foment investments to constructively shape the trajectory of change toward the greatest social and economic benefit.”

 

  1. Rising labor productivity has not translated into broad increases in incomes because labor market institutions and policies have fallen into disrepair.

This negative consequence hasn’t been charged solely to technological change, but new technology has contributed to the growth of the disparity.

 

  1. Improving the quality of jobs requires innovation in labor market institutions.

The solution to this problem requires a balanced partnership. “The U.S. must innovate to rebalance the desire of employers for low-cost, minimal commitment, and maximal flexibility, with the necessity that workers receive fair treatment, reasonable compensation, and a measure of economic security.”

 

  1. Fostering opportunity and economic mobility necessitates cultivating and refreshing worker skills.

As work environments become more technically demanding, systems need to be in place to enable workers to remain productive.

 

  1. Investing in innovation will drive new job creation, speed growth, and meet rising competitive challenges.

Investments in innovation will expand the opportunities for work, and it should involve private, federal, and other institutional investing.

 

In Chapter 3 of the report titled “Technology & Innovation,” there are varied examples of new technology in specific sectors. Some describe disappointing results, such as in 3.2, “The Robots You Don’t See: AI in Insurance,” and some surprising successes (3.3, “Invisible Robots in Healthcare”). Some fields, such as autonomous vehicles, experience a wide variety of complications that have slowed the progress (3.4, “A Driverless Future?”) while others look wide open for new application (3.5, “Warehousing and Distribution”).

 

Throughout, we’re reminded of the need for both patience and urgency. The repeated claim “Major technologies often take four decades from invention to full adoption” probably should appear on the cover of the report.

 

CAUTIOUS OPTIMISM

 

There’s a general reassurance in both reports that technological change can and will be beneficial. One clear expression of that optimism appears in the MIT study: “No economic law dictates that creation of new work must equal or exceed the elimination of old work. Still, history shows that they tend to evolve together.” This won’t be a grim contest but rather an emerging partnership.

 

A common concern expressed in both studies is the widening inequality gap for workers, and much space is devoted to explaining the how and why, and what can be done to prevent this emerging crisis from creating further damage. The role of technology regarding this widening chasm is central in both discussions.

 

One focused section that appears early in the MIT study outlines the problem. The title of the chapter section and the general statement summarizes what both studies point to as an impending crisis.

 

2.7, “Why Did U.S. Workers Fare So Poorly Despite Rising Productivity?”

 

“Why has the United States failed, over the past four decades, to translate rising productivity into improved job opportunities and higher earnings for the majority of workers? Three forces contributed: technological change, globalization pressures, and institutional changes.

 

Technological change has been a central driver of the rising wage premium paid to formal skills and expertise. By enabling a digitalization of work, computers and the internet have made highly educated workers more productive and made less-educated workers easier to replace with machinery. This should not come as a surprise, as information technology has significant genealogy in managerial techniques designed to wrest control away from workers and toward abstract processes. Digitalization has also likely contributed to—though does not solely explain—the rising concentration of top incomes. By allowing innovative ideas to scale rapidly (e.g., in software, in finance, in entertainment, in unique business models such as Amazon or Facebook), digitalization has enabled entrepreneurs to amass vast fortunes. Just as importantly, the multiplier effect of a networked world has created outsized rewards for top talent in many sectors, such as medicine, law, design, finance, and entertainment.”

 

The problems accompanying technological disruption and the new division of labor are now exacerbating a different kind of division that’s both economic and social, and that, according to the World Economic Forum and MIT, requires serious, immediate attention.

 



Michael Castelluccio has been the Technology Editor for Strategic Finance for 26 years. His SF TechNotes blog is in its 23rd year. You can contact Mike at mcastelluccio@imanet.org.


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